This tiny little change is a big deal.
When you file your tax returns this year, you will no longer be required to fill out “Line 61,” which indicates whether you have maintained insurance coverage throughout the year or paid the penalty.
Filling out that line was required by law for the last several years under Obamacare. If you failed to do so, it was considered a “silent return” and would be rejected and sent back to the taxpayer.
But thanks to President Donald Trump’s executive order loosening rules and requirements for Obamacare, filling out that line is now optional. Those who do not fill out that line will still have their tax return processed and their refund – if they’re getting one – sent out, Reason Magazine reports.
“The recent executive order directed federal agencies to exercise authority and discretion available to them to reduce potential burden,” the IRS said in a statement to Reason. “Consistent with that, the IRS has decided to make changes that would continue to allow electronic and paper returns to be accepted for processing in instances where a taxpayer doesn’t indicate their coverage status.”
The IRS is actually thrilled that they don’t need to reject all those returns and send them back to the taxpayer. They say it will reduce strain on taxpayers and the IRS themselves. “Processing silent returns means that taxpayer returns are not systemically rejected, allowing them to be processed and minimizing burden on taxpayers, including those expecting a refund,” the IRS statement said.
So while the individual mandate is still officially on the books, it’s going to make it much easier for individuals to go without coverage while avoiding the penalty. It’s a weakening of the enforcement mechanism – because it’s hard to enforce something without any information.
The move has already raised questions about its legality. Federal law gives the administration broad authority to provide exemptions from the mandate.
But “it does not allow the administration not to enforce the mandate, which it appears they may be doing here,” says Michael Cannon, health policy director at the libertarian Cato Institute. “Unless the Trump administration maintains the mandate is unconstitutional, the Constitution requires them to enforce it.”
“The mandate can only be weakened by Congress,” says Ellis. “This is a change to how the IRS is choosing to enforce it. They will count on voluntary disclosure of non-coverage rather than asking themselves.”
The IRS notes that taxpayers are still required to pay the mandate penalty, if applicable. “Legislative provisions of the ACA law are still in force until changed by the Congress, and taxpayers remain required to follow the law and pay what they may owe,” the agency statement said.